2018/19 Overview of the Nigerian Economy
Macroeconomic Overview
The economy has maintained its mono-product nature despite series of government efforts to achieve
maximum diversification. Nigeria is still generating over 70% of foreign exchange earnings from crude oil
exports. Consequently, there remains a significant level of market volatility which is further increasing due
to the current political season.
Nigeria has several favourable economic indicators, such as its Gross Domestic Product (GDP) and
Consumer Price Index (CPI). However, risk averse investors (particularly foreigners) will continue to hedge
their investments in the market as uncertainty grows due to political, policy and infrastructural related
impediments.
Source: National Bureau of Statistics (NBS) CPI Reports
Source: National Bureau of Statistics (NBS) GDP Reports
Source: World Bank Group
Source: Central Bank of Nigeria (CBN)
These four economic indicators are significant to establishing a high level of investors’ confidence in the
Nigerian economy. Thus far, the CBN has focused on inflation and interest rates by driving monetary
policies that can maintain price stability within the market.
Meanwhile, the Presidential Enabling Business Environment Council (PEBEC) made efforts to improve on
the state of the business environment, but it remains to be seen if the momentum is currently the same
with the World Bank set to release this year’s Global Ease of Doing Business Index.
1
Ultimately, Nigeria’s economic and business potentials are endless as it is Africa’s largest market with over
190 million people. Over 50% of the population consists of people under the age of 40 and the economy
is touted to have a gradually expanding middle class. It is on this premise that the following sectors have
been made our main targets for business.
SECTOR
Financial
Technology
JUSTIFICATION
This industry has witnessed relative growth in the last 5 years based on the rise in local
e-payment and e-commerce activities. The CBN’s National Financial Inclusion Strategy
(NFIS), which set a financial inclusion target of 80% to be achieved by 2020, is also
creating the political will to support the industry via favourable policies.
Several financial services such as mobile money, agent banking, micro-insurance,
micro-pensions etc. are being rolled out across the market. However, consumer trust
and financial literacy remain key issues; hence the apex bank’s constant efforts to
improve on the consumer protection framework and local financial literacy rate.
Agriculture
Microfinance Banks also present significant opportunities as the CBN might (in the
long-term) raise the industry capitalization which can cause a large number of
liquidations as well as Mergers & Acquisitions (M&As).
Agriculture has received considerable attention from Nigeria’s public sector in the last
eight years, with the previous and current governments implementing roadmaps to
facilitate the industry’s growth.
In terms of financing, the CBN has played a key role in providing support to the
industry. However, private sector lending to agriculture remains low as the retail and
commercial banks continue to be risk averse towards the long gestation periods of
agricultural investments.
Infrastructure
Health
NOTE: Crowd-funding now serves as the alternative means of funding the industry,
which creates opportunities for our business, along with other largely untapped
alternatives such as Venture Capital.
As Nigeria’s infrastructure deficit grows at an exponential rate, the government has
realized that the private sector is best suited to run capital intensive industries such as
power, transport (road/rail/ sea/air), and real estate. As such, privatization schemes
have taken effect across the aforementioned sectors; but without sustainable funding
frameworks which presents opportunities to our business. Investors, looking to make
fresh investments in entirely new infrastructure projects, can also be supported by our
business.
Primary and secondary health remains the worst hit segments of Nigeria’s health
industry. Thus, rural dwellers and those at the bottom of the financial pyramid lack
access to good health care. This is where health insurance can play a key role, and our
business can provide financial advisory services to the insurers.
Also, on the health-tech convergence front we can help raise funding for start-ups with
innovative (technology based) ideas that promote health services of better quality for
Nigerians.
2